UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 17, 2015
Summit Financial Group, Inc.
(Exact name of registrant as specified in its charter)
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West Virginia
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No. 0-16587
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55-0672148
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(State or other jurisdiction of
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(Commission File Number)
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(I.R.S. Employer
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incorporation or oanization)
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Identification No.)
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300 North Main Street
Moorefield, West Virginia 26836
(Address of Principal Executive Offices)
(304) 530-1000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Section 5 - Corporate Governance and Management
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ITEM 5.02
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Departure of Directors or Certain Officers, Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officers
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On February 17, 2015, Summit Financial Group, Inc. (the “Company”) and its Chief Executive Officer, H. Charles Maddy, III, extended the term of Mr. Maddy’s Employment Agreement dated March 4, 2005, for an additional year until March 4, 2018. A copy of the Sixth Amendment to the Amended and Restated Employment Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
On February 17, 2015, the Compensation and Nominating Committee of the Board of Directors of the Company approved the terms of the Company’s Executive Officer Management Incentive Plan for 2015. The Executive Officer Management Incentive Plan for 2015 provides eligible participants, including executive officers of the Company, with the opportunity to earn a bonus equal to 25% of the executive officer’s base salary as of January 1, 2015 multiplied by a multiplier based on the Company’s
annual return on average tangible equity (“ROATE”) for 2015. The targeted range for the Company’s ROATE for 2015 is 10.00 to 10.99 percent. If the Company’s actual ROATE for 2015 is within this targeted range, each executive officer will receive an incentive payment equal to 25% of their respective annual base salary as of January 1, 2015 (the “Targeted Incentive”).
If the Company’s actual ROATE for 2015 is greater than the targeted range, executive officers will be eligible to receive an incentive that is greater than the Targeted Incentive; conversely, if the Company’s actual ROATE for 2015 is less than the targeted range, executive officers will be eligible to receive an incentive that is less than the Targeted Incentive.
A copy of the Executive Officer Management Incentive Plan for 2015 is included as Exhibit 10.2 and is incorporated herein by reference. The above summary is qualified in its entirety by reference to the Executive Officer Management Incentive Plan for 2015 attached as Exhibit 10.2.
Section 9 - Financial Statements and Exhibits
ITEM 9.01.
Financial Statements and Exhibits
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10.1
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Sixth Amendment to the Amended and Restated Employment Agreement between Summit Financial Group, Inc. and H. Charles Maddy, III
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10.2
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Executive Officer Management Incentive Plan for 2015
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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SUMMIT FINANCIAL GROUP, INC.
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Date: February 23, 2015
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By:
/s/ Julie R. Cook
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Julie R. Cook
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Vice President &
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Chief Accounting Officer
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Exhibit 10.1
SIXTH AMENDMENT TO
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(this “Agreement”), entered into as of the 17th day of February, 2015, by and between SUMMIT FINANCIAL GROUP, INC., a West Virginia corporation and bank holding company (“Summit”) and H. CHARLES MADDY, III, (“Maddy”).
W I T N E S S E T H:
WHEREAS, on March 4, 2005, Summit and Maddy entered into that certain Employment Agreement whereby Summit agreed to employ Maddy and Maddy accepted employment as the Chief Executive Officer of Summit (the “Employment Agreement”); and
WHEREAS, the original term of the Employment Agreement commenced on March 4, 2005, and extended until March 4, 2008; and
WHEREAS, the Board of Directors of Summit or a committee designated by the Board of Directors of Summit is required by the terms of the Employment Agreement to review the Employment Agreement at least annually, and the Board of Directors of Summit may, with the approval of Maddy, extend the term of the Employment Agreement annually for one (1) year periods (so that the actual term of the Employment Agreement will always be between two and three years); and
WHEREAS, on December 6, 2005, December 12, 2006, and December 14, 2007, the Compensation and Nominating Committee of the Board of Directors of Summit met to review the Employment Agreement and extended the term of the Employment Agreement for an additional one (1) year term; and
WHEREAS, the Employment Agreement was amended and restated on December 9, 2008 (the “Amended and Restated Employment Agreement”) and the term of the Employment Agreement was thereby extended for an additional one (1) year until March 4, 2012.
WHEREAS, on February 4, 2010 , the Compensation and Nominating Committee of the Board of Directors of Summit met to review the Amended and Restated Employment Agreement and extended the term of the Amended and Restated Employment Agreement for an additional one (1) year until March 4, 2013; and
WHEREAS, on December 14, 2010, the Compensation and Nominating Committee of the Board of Directors met to review the Amended and Restated Employment Agreement and extended the term of the Amended and Restated Employment Agreement for one (1) year, until March 4, 2014.
WHEREAS, on February 16, 2012, the Compensation and Nominating Committee of the Board of Directors met to review the Amended and Restated Employment Agreement and extended the term of the Amended and Restated Employment Agreement for one (1) year, until March 4, 2015;
WHEREAS, on February 14, 2013, the Compensation and Nominating Committee of the Board of Directors met to review the Amended and Restated Employment Agreement and extended the term of the Amended and Restated Employment Agreement for one (1) year, until March 4, 2016;
WHEREAS, on February 14, 2014, the Compensation and Nominating Committee of the Board of Directors met to review the Amended and Restated Employment Agreement and extended the term of the Amended and Restated Employment Agreement for one (1) year, until March 4, 2017; and
WHEREAS, on February 17, 2015, the Compensation and Nominating Committee of the Board of Directors met to review the Amended and Restated Employment Agreement and extended the term of the Amended and Restated Employment Agreement for one (1) year, until March 4, 2018.
WHEREAS, Maddy and Summit desire to enter into this Agreement to evidence the extension of the Employment Agreement for an additional one (1) year until March 4, 2018.
NOW THEREFORE, for and in consideration of the premises and mutual covenants, agreements and undertakings, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties covenant and agree as follows:
1.
Amendment to Employment Agreement
. Effective as of the date of this Agreement, the term of the Employment Agreement shall be until March 4, 2018.
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Enforceable Documents
. Except as modified herein, all terms and conditions of the Employment Agreement, as the same may be supplemented, modified, amended or extended from time to time, are and shall remain in full force and effect.
3.
Authority
. The undersigned are duly authorized by all required action or agreement to enter into this Agreement.
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Modifications to Agreement
. This Agreement may be amended or modified only by an instrument or document in writing signed by the person or entity against whom enforcement is sought.
5.
Governing Law
. This Agreement, and any documents executed in connection herewith or as required hereunder, and the rights and obligations of the undersigned hereto and thereto, shall be governed by, construed and enforced in accordance with the laws of the State of West Virginia.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the date first written above.
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SUMMIT FINANCIAL GROUP, INC.
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By:
/s/ Oscar M. Bean
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Its: Chairman
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/s/ H. Charles Maddy, III
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H. Charles Maddy, III
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Exhibit 10.2
SUMMIT FINANCIAL GROUP, INC.
Executive Officer Management Incentive Plan
for 2015
OBJECTIVE
The objective of the Executive Officer Management Incentive Plan for 2015 (“2015 MIP”) is to incent and reward select members of Summit Financial Group, Inc.’s and its subsidiaries’ (collectively hereafter, “Summit’s”) management team for their exceptional performance, while still balancing risk with reward.
PARTICIPANT ELIGIBILITY
Eligibility for participation in the 2015 MIP is extended to the following executive officers (“Eligible Participants”):
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Summit Financial Group, Inc.
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Summit Community Bank, Inc.
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Chief Executive Officer
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Chief Operations Officer
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Chief Financial Officer
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Chief Credit Officer
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Chief Accounting Officer
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Chief Lending Officer
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To be eligible to receive a 2015 MIP payment, Eligible Participants must be employed for the entirety of 2015. If an otherwise Eligible Participant separates from employment at Summit for any reason, voluntarily or involuntarily, prior to January 1, 2016, no incentive will be paid to such Eligible Participant.
MIP COMPUTATION
The 2015 MIP computation is based upon Summit achieving a targeted range of annual return on average tangible equity (“ROATE”). For purposes of the 2015 MIP, Summit’s ROATE is to be calculated on a consolidated basis for the year ended 2015, as follows:
Net Income + (Amortization of Intangibles x 0.63)
Average Shareholders’ Equity - Average Intangibles
The 2015 MIP’s targeted range for Summit’s ROATE for 2015 is 10.00 to 10.99 percent. If Summit’s actual ROATE for 2015 is within this targeted range, each Eligible Participant will receive an incentive payment equal to 25% of their respective annual base salary as of January 1, 2015 (the “Targeted Incentive”).
If Summit’s actual ROATE for 2015 is greater than the targeted range, Eligible Participants will be eligible to receive an incentive that is greater than the Targeted Incentive; conversely, if Summit’s actual ROATE for 2015 is less than the targeted range, Eligible Participants will be eligible to receive an incentive that is less than the Targeted Incentive.
The formula to compute each Eligible Participant’s incentive payment under the 2015 MIP is as follows:
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Eligible Participant's Annual Base Salary on January 1, 2015
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x
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25%
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x
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MIP Multiplier
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=
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Eligible Participant's 2015 MIP Incentive
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The MIP Multiplier to be used for purposes of the above formula varies based upon Summit’s actual ROATE for 2015, as follows:
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Summit's Actual ROATE for 2015
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MIP Multiplier
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Less than 8%
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0%
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8.00% to 8.99%
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80%
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9.00% to 9.99%
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90%
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10.00% to 10.99%
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Target
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100%
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11.00% to 11.99%
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127%
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12.00% to 12.99%
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162%
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13.00% to 13.99%
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195%
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14.00% and greater
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210%
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In addition to the 2015 MIP incentives which may be awarded to Eligible Participants in accordance with the above formula, an additional incentive totaling no more than $40,000 may be awarded at the discretion of Summit’s Chief Executive Officer, in whole or in part, to one or more deserving Summit employees who are not Eligible Participants.
OTHER MIP TERMS
No incentive under the 2015 MIP will be made, if at December 31, 2015 through the time of payment of the 2015 MIP incentive, Summit or any affiliate is subject to any active or pending, formal or informal, agreement or enforcement action to which any bank regulatory authority is a party, including but not limited to a memorandum of understanding, written agreement, or order of cease and desist.
PAYMENT OF INCENTIVES
The 2015 MIP incentive will be calculated after January 1, 2016 and paid as soon as practicable following Summit’s filing of its Form 10-K for the year ended December 31, 2015 with the Securities and Exchange Commission but no later than March 31, 2016.
INTERPRETATIONS, AMENDMENTS OR DISCONTINUATION
All interpretations of or amendments to the 2015 MIP will be made at the sole discretion of Compensation and Nominating Committee of the Summit Financial Group, Inc. Board of Directors. The 2015 MIP may be discontinued or revised by the Compensation and Nomination Committee at any time.
